September 24, 2006

TechMeme’s Business Model

Clearly, TechMeme has a large audience; now it's rolling out a business model (note to Web 2.0 start-ups, a business model is something that generates revenue to keep the lights on) through sponsorships in which companies can have their blogs prominently featured. So why the sponsorship route over banner ads or Google AdSense? TechMeme's Gabe Rivera explains this “approach over banner advertising are numerous. “Click-throughs” can lead to the visitor browsing, commenting on, and even subscribing to the sponsor's blog. And a sponsor has direct control over what appears on Techmeme simply by posting.” It's an interesting model based on three key issues: it is obviously attractive to companies that have blogs; these companies need to see TechMeme as an attractive place to advertise; and you need a pretty healthy potential advertising base to make it work. For companies with blogs, a TechMeme sponsorship deals suggests your blog better be interesting/compelling/information and regularly updated – otherwise you risk attracting traffic only to disappoint visitors. So how many corporate blogs fall into this category? Does this limit the number of potential TechMeme sponsors? Another issue is how much these sponsorships cost and their ROI. How many technology companies with high-quality blogs are willing to advertise on TechMeme. Will TechMeme appeal to Web 2.0 start-ups used to operating lean and mean? If so, will they spend money on TechMeme sponsorships as opposed to attracting blogger coverage? To his credit, Rivera has rolled out a unique business model that at first blush seems fairly appealing. For companies looking for exposure and prepared for visitors, it's yet another online advertising option. It will be interesting to see which companies embrace the model and how much attention they receive.
Update: Jeff Jarvis provides some insight into the cost of sponsorship and its CPM rate, while Mathew Ingram talks about why he likes the model.
Update II: In the spirit of TechMeme's sponsorship model, TheGoodblogs is offering Web start-ups, which can't afford a $2K or so a month on advertising, the chance to have a free exposure on their cool blog discovery widget.

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